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2/21/2025

Dye & Durham Names Sid Singh as New Interim Chief Executive

Toronto Globe & Mail (02/21/25)

Dye & Durham Ltd. (DYNDF) has named Sid Singh as interim chief executive officer, effective immediately. The software company has been looking for a new chief executive since last year when then-chief executive Matthew Proud announced plans to step down. Singh, who was already a member of the company’s board, will remain a director of the company and succeeds Hans Gieskes, in the interim CEO role. Gieskes, who was also replaced as chair, is expected to remain on the board. Dye & Durham said Arnaud Ajdler, the company’s lead independent director, has been appointed chair of the board. Activist investor Engine Capital successfully pushed for a shakeup at the company in December. Engine Capital’s slate of nominees was appointed after the previous board resigned together ahead of a shareholder vote.

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2/21/2025

Smith & Nephew Prepares Critical Results Under Pressure to Break Up

The Times (London) (02/21/25) Ralph, Alex

The FTSE 100 medical equipment company Smith & Nephew (SNN) is set to face increased pressure from shareholders to pursue a break-up if it fails to show progress in a turnaround of its underperforming orthopedics business when the company releases its annual results next week. Smith & Nephew has struggled with a quick turnover in chief executives and inconsistent trading over recent years, with shares down by almost 50% since 2020. The disappointing performance, exacerbated by downgrades at its third-quarter update in October, and stake-building by Cevian Capital, has led to increased scrutiny of the group’s structure, particularly the orthopedics business. Cevian has increased its holding to 7.5%, via a Jersey-based entity, disclosures with the SEC show. Cevian, which has taken seats on a number of the boards of its investments, had first publicly emerged with a 5% stake last July. Rupert Soames, who has been Smith & Nephew’s chairman since September 2023 and is chairman of the Confederation of British Industry, has resisted calls for a break-up, saying the company’s “well-formed strategy … encompasses all three of our business lines.” Deepak Nath, the chief executive, has vowed to fix the orthopedics business, its largest unit, which includes knee and hip implants, saying last year that “we strongly believe in the value, the synergies” across the three businesses. The management’s “12-point plan” also includes cutting overdue orders, launching new products and making productivity improvements to generate more than $200 million of annual savings by this year. Cevian said in July that Smith & Nephew owns “fundamentally attractive businesses in structurally growing markets” and that it had “high expectations” for the company to improve its operating performance. Analysts at UBS told clients after October’s third-quarter results that the broker had received a lot of attention from investors asking for an estimate of Smith & Nephew’s “sum of the parts valuation … in part due to the perception that there could be significant value hidden at the group.” UBS forecast Smith & Nephew on that basis at £16 per share, compared with the current share price of £10.26. Following remarks by John Rogers, Smith & Nephew's chief financial officer since April, UBS expects the company to update its reporting this year, and to provide greater transparency on divisional profits and the allocation of central costs, which the broker believes will help “to unlock some of this.” Ahead of the full-year results on Tuesday, analysts at Barclays said: “The picture is worsening meaningfully in hips and improving somewhat in knees … and we remain cautious on SN [Smith & Nephew] and the turnaround story.” Following a decline in the share price after the third-quarter update, analysts at Goldman Sachs had said it “implies very little value” for orthopedics and reiterated its “buy” rating, forecasting earnings revisions and re-rating over the next 12 months.

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2/21/2025

BP’s CEO Cut His Teeth on Crisis — Now He Faces the Toughest Test Yet

Bloomberg (02/21/25) Ferman, Mitchell; Gopinath, Swetha; Nair, Dinesh

BP Plc (BP) CEO Murray Auchincloss faces what many BP shareholders, analysts, and former employees say is the most important test for the energy giant since the 2010 Deepwater Horizon disaster which became the largest-ever marine oil spill in the United States, costing $65 billion. After years of poor performance — including a 16% share-price drop in 2024 — BP is in the crosshairs of the world’s most famous activist investor, Elliott Investment Management. It has built a large stake in the struggling oil giant and is demanding transformative changes, including major cost cuts, asset sales, and an exit from renewable power. After months of waiting, investors will finally hear from Auchincloss on Wednesday, when he is set to reveal a new strategy he promised will “fundamentally reset" the company. The stakes are high — people familiar with Elliott’s thinking say the next moves from the activist investor, which is renowned for its aggressive tactics, will depend on whether the CEO presents a bold enough plan. A quintessential company insider, Auchincloss is respected by colleagues for his financial acumen and his calm, steady manner. Yet his relatively low profile compared with other CEOs hasn't inspired confidence in outsiders. Several top-30 investors have privately voiced to Bloomberg their frustration with the lack of clear direction and bold changes, saying they welcome Elliott's intervention. Auchincloss has an unenviable list of challenges: steering the company back toward oil and gas after five years focused on green energy; managing a balance sheet that means BP, alone among its peers, may not be able to sustain its current level of share buybacks; curbing a high cost structure and bloated workforce while keeping employees on board for an arduous multiyear turnaround. “Murray's in a tough spot,” said RBC analyst Biraj Borkhataria. At BP's Feb. 26 strategy day, which was delayed by about two weeks to allow Auchincloss to recover from an undisclosed medical procedure, he had been planning to emphasize BP's return to its roots in Middle East oil, specifically Iraq's Kirkuk field. Given usual oil-industry timelines, this was shaping up to be a multiyear turnaround. Elliott's intervention opened the way for something more drastic. The activist wants BP to continue as a standalone company, but with big changes, according to people familiar with its thinking. Elliott is pushing for significant cuts to BP's cost base and sizable asset sales to help reduce debt. It also wants to see an exit from some businesses such as renewable power. Shareholders told Bloomberg that Auchincloss and his team should only be investing in areas of the energy transition where there's a competitive advantage. Even so, there's a divide between those who are urging the spinoff of the electric vehicle charging business — which is closely tied to its huge network of fuel retail sites — and others who see it as a wise long term play even if it doesn't bring significant revenue in the medium term. BP's strategy update had long been planned for February and the details have been in the works for months. Still, some people familiar with the matter say the company has expanded the scope of its planned announcements to try and meet the lofty expectations. Another person said only some messaging was changed after Elliott's arrival. Some investors worry that Auchincloss may have already lost control of the narrative to Elliott. Speculation about a breakup or even a full scale takeover of BP has been amplified by recent events, and its rivals have been running the numbers on a takeover, according to people familiar with the matter. Others say the CEO still has the opportunity to get things back on track. Inside BP, employees say Auchincloss has been focused on the less dramatic aspects of the current situation — simplifying focus, turning around businesses, reducing costs. “Murray is a steady pair of hands and will absolutely be driven by returns,” said former Chief Financial Officer Brian Gilvary, who worked very closely with Auchincloss. “Provided the board gets behind him, and it understands the pace of the energy transition will require oil and gas for a very long time.”

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2/20/2025

Ires Reit Sees Return to Earnings Growth Following Agreement with Activist Investor

Irish Examiner (02/20/25) Walsh, Emer

The residential landlord Ires Reit (IRES) saw a return to earnings growth in 2024, with the company's new strategic review, agreed upon last year, starting to yield results. However, the property investor posted a pre-tax loss of €6.7 million in 2024, driven by a yield expansion of around 0.2% in the first six months of last year which saw an almost €34 million non-cash fair value reduction for 2024. The group's like-for-like revenue growth was 1.7% in the year, underpinned by rental increases and income from new initiatives. Ires Reit reported just over €85 million in revenue, reflecting a fall of 3% on the previous year which it said was due to company disposals following a dispute with activist investors last year. That dispute saw Ires spend more than €2.5 million combating the activist shareholder Vision Capital in 2024. The landlord said its portfolio was effectively fully occupied at 99.4% at the end of the year, reflecting strong underlying demand for rental properties in Dublin. Earnings growth for the year was 1.4% Ires Reit said, with an adjusted EPRA earnings — a measure of its underlying operating performance of an investment property company that excludes fair value gains, property disposals and other noncore items — of €28.9 million which was slightly higher than the €28.5 million it recorded in the previous year. The company said it completed the disposal of 41 units in total in 2024 as part of its previously announced target of 315 units across a three to five-year period, selling 21 individual units. This resulted in an average sales premium of about 25% and a further 20 units in line with book value through a bulk sale. It also completed the bulk sale of a further 25 units outside of the 315-unit program, also in line with book values, which took the total number of units disposed of to 66 in 2024. “2024 has been a year of solid progress for Ires," said CEO Eddie Byrne. "Following the conclusion of our Strategic Review in August, we delivered improvements across key performance metrics, including achieving earnings growth in 2024. "Our ongoing asset recycling program remains a key value driver, delivering strong sales premiums, improving portfolio composition, and providing us with excess capital to deploy against our menu of accretive growth options, including through the share buyback program which we intend to launch shortly." Looking forward, Byrne said the company will maximize value for shareholders through the implementation of our strategic initiatives. "We will also continue to engage constructively and consistently with the Government as it reviews the rental regulations. As an Irish long-term investor with permanent capital at our disposal, we are uniquely positioned to navigate the evolving market landscape and deliver sustainable growth into the future.”

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2/20/2025

Rio Tinto Rejects Call by Activist Investor to End Dual Listing

Bloomberg (02/20/25) Hunt, Paul-Alain

Rio Tinto Group (RTNTF) has rebuked a call from activist investor Palliser Capital UK Ltd. to unify its dual listing into an Australian-domiciled holding company, saying tax costs would amount to billions and there was nothing to gain. Palliser has been asking Rio to end its London listing since May, arguing unification could “unlock $28 billion of upside in the near term” for shareholders and that the current structure had cost investors $50 billion. “The Board firmly rejects Palliser’s claim of $50 billion of lost value over the past 30 years, of which Palliser states $35.6 billion is attributable to structural impediments caused by the DLC structure,” Rio said. “Contrary to Palliser’s claims, unification is not a low-cost decision from a tax perspective.” Glencore Plc (GLNCY), another mining giant, on Wednesday said it’s studying whether to move its primary listing away from London, as a flux of companies exit the UK capital in search of deeper liquidity and heftier valuations. BHP Group (BHP) did so in 2022, while oil major Shell Plc (SHEL) has been considering a move to the U.S. Rio’s board said it conducted an independent review of the listing structure last year, but failed to find any benefits. The company recommended shareholders vote against a Palliser motion to engage an independent firm to conduct another study. Rio’s share register is far more weighted to London compared with BHP’s at the time. It has about three-quarters of its stock listed in the UK.

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2/20/2025

Trump Administration Considers Letting U.S. Steel Remain a Standalone Business

Axios (02/20/25) Shen, Lucinda

Members of the White House held conversations in recent weeks with Ancora, the activist investor pushing to keep U.S. Steel (X) independent, according to Ancora Alternatives CEO Jim Chadwick. The administration is, at the very least, weighing the possibility of allowing U.S. Steel to go it alone. Nippon Steel's (NPSCY) $14.9 billion attempt to buy U.S. Steel turned political last year, with the Biden administration blocking the deal citing national security concerns. The Trump administration has carried that torch onward, saying he wants U.S. Steel to remain domestically owned. President Trump more recently said he also wouldn't mind if Nippon Steel took a minority stake in the business. Ancora's Chadwick says the firm spoke with Trump officials earlier this month in what he describes as a "fact finding exercise." The conversation, which occurred shortly before Japanese Prime Minister Shigeru Ishiba's visit to the White House, circled around the viability of U.S. Steel going it alone. Ancora has vehemently opposed the Nippon Steel merger, and has sought to nominate nine new board members to U.S. Steel. The activist investor has also identified Alan Kestenbaum, former CEO of Stelco (STLC), as their preferred CEO. Nippon Steel had previously promised to inject new capital into the business, something Ancora currently isn't putting on the table (though it isn't ruling out the possibility in the future). There's also Cleveland-Cliffs (CLF), which has reportedly shown interest in a bid for U.S. Steel. In his final days as president, Joe Biden delayed an order for Nippon Steel to abandon the deal to June — leaving the door open for a comeback. Chadwick wants to see Trump shorten it to 30 days.

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2/20/2025

Outback Steakhouse Parent Bloomin' Brands Lays Off 100 Employees

Restaurant Business (02/20/25) Guszkowski, Joe

Bloomin’ Brands (BLMN), the parent company of Outback Steakhouse, is laying off about 100 employees at its headquarters in Tampa, Florida. The cuts will affect about 17% of staff across numerous departments at the company’s home office, which is known as the Restaurant Support Center. In an SEC filing on Thursday, Bloomin’ said the move is intended to realign the business after it refranchised its Brazilian operations in December. It also cited challenging industry trends and a desire to focus on growth and efficiency. “The Company believes this will further support its long-term strategy and path to sustainable growth in traffic, comparable sales, and profitability,” it said in the filing. Outback, Bloomin’s largest concept, has struggled in recent years. Same-store sales at the 674-unit steakhouse chain have declined in five straight quarters amid a pullback in consumer spending and stiff competition in casual dining, particularly in the steak segment. Bloomin’ also owns Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime. Over the past year, Bloomin’s stock is down nearly 56%, and it has attracted an activist investor, Starboard Value, that is pushing for changes. In August, Bloomin’ named former Delta Air Lines COO Mike Spanos as its new CEO, replacing David Deno, who retired after 12 years with the company.

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2/20/2025

Activist Trust Launches to Tackle Alternative Sector Discounts

QuotedData (02/20/2025) Williams, Richard

A new activist investment company is looking to launch with its sights set on “poor performing” alternative investment companies. A prospectus has been published for Achilles Investment Company, which will start trading on Monday after raising £54 million. It will be managed by Harwood Capital Management and led by its chief executive Chris Mills, with Robert Naylor on the board of directors. The pair worked together to achieve exits for investors at Hipgnosis Songs Fund and more recently PRS REIT. Its focus will be on companies in the property, infrastructure, and renewables sector (where it said a £39 billion valuation gap has opened up between market caps and asset values in these sectors) and it will look to hold one or two trusts at a time (but up to a maximum of five). It aims to work with boards to realize value for shareholders. This could be achieved through seizing control of the companies and selling off the portfolio, but in some cases mergers, fee reductions, manager changes, and other less drastic measures may be pursued to encourage a re-rating. After working with boards and advisers to achieve a result that satisfies investors, it will then use any cash to offer an exit to its investors if they choose. There is a base management fee of 1% on the lower of market cap or NAV, and a performance fee of 10% if they can deliver a cash exit that is more than 10% above Achilles’s in-price. The team said that it has unlocked around $950m of shareholder value through activism in the last 18 months – with Round Hill Music sold at a 51% premium to when they were appointed to the board, Hipgnosis Song sold at a 44% premium and PRS REIT currently trading at a 46% premium to when it opened discussions with the board last summer.

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2/20/2025

Alight Names New Chairman and Three New Board Members

Crain's Chicago Business (02/20/25) Asplund, Jon

Alight (ALIT) has replaced its chairman and three other members of its board of directors as part of a cooperation agreement with Starboard Value. The employee benefits services provider, formerly Hewitt Associates, said its board appointed Russell Fradin as chairman, succeeding William Foley, II, who will continue to serve as a board member. Fradin is a former chairman and CEO of Alight predecessor Aon Hewitt and is currently a partner at private-equity firm CD&R. Robert Schriesheim, Robert Lopes Jr., and Mike Hayes have also been appointed to the board, replacing Erika Meinhardt, Regina Paolillo, and Dan Henson, who have each chosen to step down. The changes are effective March 1. Starboard nominated people to the board at Alight's annual meeting last year. The company said the appointments satisfy Alight’s remaining obligations under its May 2024 cooperation agreement with Starboard. The past 12 months have seen big changes at Chicago-based Alight, which sold off two business units for more than $1 billion and, in August, replaced CEO Stephan Scholl with Dave Guilmette. Guilmette had joined the Alight board as vice chair in May. He previously served as CEO of Global Health Solutions, a multibillion-dollar division of Aon Plc (AON). Alight was spun off from Aon in 2017 and went public in 2021 through a blank-check initial public offering via a merger with a special-purpose acquisition company. The company also released its fourth-quarter and 2024 results, which Guilmette characterized as ending on a "strong note," with fourth-quarter results that met expectations and included recurring revenue expansion and strong cash flow. For the year, Alight reported that while revenue decreased 2.3%, its business process as a service (BPaaS) revenue grew 15%. BPaaS represents more than 20% of the company's total revenue. 2024's net loss of $140 million was significantly less than the 2023 net loss of $317 million it reported. However, the fourth quarter saw net income rise $29 million, compared to the prior-year period net loss of $121 million. Guilmette said the outlook for 2025, while still impacted by contract losses of 2023 and early 2024, will be transitional, with a simplified company, a completed technology modernization and "a strong leadership team in place." "I would like to share my deep appreciation for Erika, Regina and Dan, who have been a tremendous asset to our Board of Directors, guiding Alight through its early evolution as a public company,” said Guilmette. He added that the arrival of Fradin, Schriesheim, Lopes and Hayes will support "our next phase of growth and our client-centric work of building a healthy and financially secure workforce.” Schriesheim is chairman of Truax Partners and leads large, complex transformations in partnership with boards, CEOs and institutional investors as an investor and director, the release said. Lopes has held executive leadership roles in human resources staffing at companies including HR services and staffing company Randstad and Fidelity Capital's Veritude. Hayes is managing director at Insight Partners, a global software investment firm. He was previously chief operating officer at VMware.

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